Easy Target

by Anna Wells On Aug 1, 2006

Perhaps the only thing more like a cozy pillow in your car than the airbag is your sense of security in having one. It feels nice to think there is something there to serve as a barrier between your head and human error. But what if, instead of lining your dash, this airbag that you expect to deploy in the event of the unthinkable is lining the pockets of an unscrupulous mechanic?

Airbag fraud is a serious issue, possibly affecting your fleet if you contract out the body work on your light duty vehicles. The problem is you might not realize it until it is too late. And even if it doesn't affect you on the road, it will likely affect your finances by way of higher insurance premiums. If that doesn't make you angry, think about it this way: you could be paying for a product and installation that you don't receive—giving someone money to put your drivers' lives in danger.

WHO CARES?

Airbag fraud has received more and more media attention in recent years, but still not enough to create the kind of public outcry to force a federal legislative mandate. This means that airbag fraud laws are still in the hands of individual states. Unfortunately this issue is easily swept under the rug: how can organizations create widespread awareness when it is nearly impossible to obtain accurate statistics?

James Quiggle, director of communications for the Coalition Against Insurance Fraud (CAIF), says the estimates of yearly airbag theft range from 50-75,000. But without dismantling the airbag covers in the vehicles of every automobile in the country, we have no way of knowing.

"Reliable data does not exist," Quiggle says. "This is one of the reasons airbag fraud is not high enough on the radar screen with insurance companies—their priorities are data-driven. Without data to prove how serious and widespread the problem is, the insurance companies are not going to face pressure to make airbag safety and theft a high enough priority."

RECYCLING OR REMOVAL

There are several types of airbag fraud, according to George Kirchoff, president of the Automotive Occupant Restraint Council. "We deal with mostly false airbags—a genuine part that is replaced," Kirchoff says. "That person simply puts a false airbag cover on, but there's nothing underneath it; they can just stuff it with paper or cloth or anything that just fills the cavity." The idea then is that the crooked mechanic charges for the cost of an airbag—anywhere between $1,000 and $2,000—and sells it on the black market instead of installing it.

"Then we have what we call a salvaged airbag," Kirchoff says. Salvaged airbags are basically "recycled" airbags that have been deployed and then restored to work again. There are several problems with salvaged airbags. One is that you may be paying for a new airbag and receiving a recycled airbag, and the repair shop is pocketing the difference. Another, bigger problem is that there are very few ways of telling whether it is as fully functional as a new airbag or not.

"We don't know what may have occurred to it," Kirchoff says. "Probably a lot of them are good, but at the same time there may be some that are not good. For example, if a car has been under water—especially with the hurricanes this last year—then there would be a major concern whether this airbag would function properly."

SETTING THE STAGE

Another trick you might see from a crooked body shop, according to Quiggle, is the staging of an airbag deployment. "If a car is in an accident and an airbag does not deploy, a crooked body shop can take that car and open up the airbag module, pull the airbag out, and make it appear as if the airbag was deployed in the crash, even when it wasn't," Quiggle says.

"This can create a large insurance windfall for the body shop. They can buy a used airbag on the black market for one or two hundred dollars. Then they can charge the insurance company for the cost of a new airbag, which can easily run up to $2,000."

OUTFOXING FLEETS

Quiggle is quick to point out that fleets need to be conscious of the fact that their industry is rife for airbag fraud. "Definitely fleet owners and managers need to be very aware of the potential for crooked body shops to scam their vehicles by removing airbags that never deployed, and charging their insurance policies as if the bags had been deployed," he says. "This can lead to excessive charges against the fleet's policy."

One of the ways a fleet can get scammed and not know is by putting too much trust in their dashboard lights. "There should be a light on the dashboard that would come on and flash for a brief period of time, then turn off. That will indicate that the airbag module is installed and is functioning," he says. "Crooked body shops can go on the internet and buy little devices that override the airbag alert light. And even if the airbag system has been damaged and rendered non-functional by a body shop, they can install a little device that will still make the light come on as if the airbag was fully functioning and safe."

He adds, "The internet is a vast wasteland of parts that crooked body shops can buy to scam fleet owners and drivers into thinking that they have functioning airbags."

THE BLACK BOX

Luckily, there are some ways to protect your vehicles from this type of crime. "Make sure the body shop uses certified mechanics, first of all, because that tends to weed out many of the crooked operators," Quiggle says.

"When a fleet vehicle has been involved in a crash, check the black box that's installed in the car to see if, in fact, the airbag has been deployed, because it registers data up to and through the crash. In many cases, if the bag did not deploy, the black box will register that fact. If the repair invoice says it was replaced but the black box data shows there was no deployment, that's a serious sign of attempted fraud."

If you're still paranoid, "You can also have an outside mechanic do diagnostic tests on the airbag module, and this will reveal if the airbag has been deployed or replaced, or if the airbag module is even functioning," Quiggle says.

TAKING ON
A SCAM

CAIF, in the meantime, is doing its best to serve as an avenue between the interests of insurance companies, consumer groups and public agencies. AORC attempts to address the issue through recommendations and consumer awareness.

"One of the big things is to inform the public of this because the public in general is not really aware of false airbags," AORC's Kirchoff says.

Quiggle concurs. "The fact that you have a vast marketplace on the internet for parts that can facilitate airbag fraud—that should tell you that the problem is out there in a significant way, but it hasn't been quantified to ring enough alarm bells in the private sector. People have died in these accidents," he says.

He adds, "Ford is so concerned about airbag fraud that they're creating a database of the serial numbers of all of the airbags that they put in their cars. The fact that Ford thinks this problem is serious enough that they're devoting major resources to this suggests that where there's smoke, there's fire."

ONLINE EXCLUSIVE

Just over a year old, Ford's anti-fraud effort has already involved 26 insurance companies who are registered for access to the site, www.oeairbags.com. Despite the fact that this database is accessible to insurance companies and state investigators, not fleets, it does mean that if you're using Ford vehicles, your airbags are probably being tracked.

To Ensure an Insurance Company

According to Steve Nantau, collision repairs supervisor for Ford's Customer Service Division, "Fraud occurs in collision repairs sometimes when a vehicle is in an accident and an estimate would be written for a new airbag, which would cost $700. Then the repairer would use a salvaged airbag that they'd buy for a hundred dollars, and the difference, they pocket. They (insurance companies) have difficulty identifying when that occurred."

"Almost 100 percent of insurance companies require new airbags if an airbag is going to be replaced," he explains. "They don't publicly approve the use of non-OE airbags."

Widespread Panic

Partially at the behest of the insurance companies, Ford conducted their own investigation by tracking airbag sales on one particular model of vehicle.

"There was a thought: how much of this is going on?" Nantau says. "We talked to State Farm and they gave us information that said they paid for 379 airbags on the '99 Taurus during 2003, and we looked at our sales and saw that we sold 40 new airbags.

"Now there are cases where dealers have airbags in inventory, and they didn't necessarily buy them from us during that time period; they may have sold them from inventory. But it was still an unbelievable number," he says.

Investigation

Since State Farm is the nation's largest auto insurer, these numbers were startling enough to cause Ford to take drastic action and, with the help of the National Insurance Crime Bureau, create a serial number tracking system that would guarantee that fraudulent airbags could be pinpointed.

"Part of that investigation could be pulling the airbag out and inspecting the serial number. They can then go to our website and input that serial number. Now the serial number would tell them either that it was one that had already been reported as installed, which means we sold it already and somebody put it in, inspected it and went to our website," Nantau says. "If that's the case, then they have a problem. And in the worst case, it's not in our database at all. Then it's not a part that Ford Customer Service Division sold. If they couldn't produce an invoice from a Ford dealer, then they've obviously picked it up at a fraudulent repair division."

Keeping your Conscience Clear

What's good for the insurance companies has also been good for Ford. "We have, over the years, tried to work with insurance companies to find areas that we have a common interest in—you know, they buy parts to repair vehicles from us, and we sell them," Nantau says.

Unfortunately Ford does not have the statistics compiled that show the type of affect this has had in deterring fraud-related crimes. Still, giving your insurance provider the ability to keep a close watch on the parts as they leave the factory and enter a vehicle should allow you to sleep a little more easily at night. This is clearly a step in the right direction in keeping the interests of drivers, insurers, manufacturers, and a fleet's bottom dollar in mind.